PennyMac Financial misses Wall Street estimates

Moorpark-based PennyMac Financial Services reported a $26.5 million profit on revenue of $143.4 million for the first quarter of 2016, missing Wall Street expectations on earnings per share and revenue.

PennyMac Financial, which was founded by former Countrywide Financial Services executives after that company was acquired by Bank of America, reported earnings of 23 cents per diluted share – 31 cents below analyst estimates. While revenue was up 2.2 percent year-over-year, it missed Wall Street’s mark by $43.5 million.

“Interest rates declined during the first quarter which drove a significant value reduction in our MSRs, even after the offset from our interest rate risk management strategies,” Chairman and CEO Stanford Kurland said in a news release. “That said, PennyMac Financial’s underlying operating results and growth trends remain solid.”

Total loan production activity of $10.9 billion in unpaid principal balance was down 2 percent from the prior quarter. Net assets under management were approximately $1.6 billion, down 6 percent.

Shares dropped 1.2 percent to $13.35 when the market closed on May 5, a decrease of 27 percent in the last 12 months. But shares have improved about 20 percent over the past three months.

One of PennyMac Financial’s primary investment customers is PennyMac Mortgage Investment Trust, a separate public company that invests in mortgages and shares the same executive management with PennyMac Financial.

PennyMac Mortgage reported a profit of $14.5 million, or 20 cents per diluted share, for the first quarter of 2016 on net investment income of $52.2 million. Profit was down 8 percent while net investment income was up 3 percent from the prior quarter.

“We are disappointed in PMT’s financial performance for the first quarter,” Kurland said in a news release.

Shares closed up 14 cents to $13.31 on May 5. That’s a 27 percent decline over the last year.